27 Company issued $1,000,000, 8% bonds on January 1, Year 1 to yield 7%. The...
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Accounting
27 Company issued $1,000,000, 8% bonds on January 1, Year 1 to yield 7%. The bonds pay interest on July 1 and January 1 and mature on January 1, Year 21. Company uses the effective interest method to amortize bond discounts and premiums.
The entry on July 1, Year 1 would include
A debit to interest expanse for $40,000
A credit to cash for $38,737
A debit to premium on bonds payable for $2,669
A debit to premium on bonds payable for $1,263
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